Tamworth's main water supply hit the magic mark of 50 per cent and had risen even further to 54.2 per cent capacity by 4pm on Wednesday.

Tamworth Regional Council's drought management plan indicated the trigger point for Tamworth, Moonbi and Kootingal to move from Level 1 water restrictions to the base level, permanent water conservation measures, is Chaffey Dam hitting 50 per cent.

The last time Tamworth was on a level that low was in January 2019, more than two years ago.

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A spokeswoman for Tamworth Regional Council told the Leader the decision to drop water restrictions would be made in the coming days.

"Council has a process in place for determining changes to water restrictions which ensures consistency and clarity in the changes," she said.

Water levels will be assessed on Monday and any change to water rules would start from the following Monday.

Heavy rain in the head of the Peel catchment area, near Nundle, during the past two weeks has soaked the ground and caused recent rain to run off and flood into the dam.

Water NSW data showed water gushed into the dam via the Peel River on Sunday, Monday, Tuesday and Wednesday after the region was hit by days of steady rain.

More than 40mm of the wet stuff has been recorded at the Tamworth airport weather station in the past two days.

The water is set to stay plugged up in Chaffey Dam, with water for Tamworth users still being drawn from Dungowan Dam and the Peel River.

The rain also gave rise to the Peel River in Tamworth, below the dam, overnight.

A moderate flood warning was issued for the Peel River, which burst its banks on Wednesday morning and peaked at 5m about midday.

Residents are reminded Level 1 water rules will remain in place until Tamworth Regional Council makes an official announcement.

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